These days, it’s easy to find offers for a wide range of different financial products online. Every financial institution has a website and, most likely, various calculators you can use to estimate rates and fees. Within a few hours of searching and conducting research, you could have dozens of loan offers to review.
But when you’re dealing with online companies and digital offers, it’s sometimes hard to compare apples to apples. What’s the best way to compare financial products you find online?
Understand What You’re Buying
Your first responsibility is to become an informed consumer. Before you can effectively compare different financial products, you need to truly understand what you’re buying. Don’t assume that you know what you’re talking about or that you know how to make this decision already; instead, challenge assumptions and do some research on terminology related to the products in which you’re interested.
For example, settlement loans are a very specific type of loan, designed to provide capital to plaintiffs who were recently personally injured. If and when the plaintiff wins a settlement, they can pay the loan back with an additional fixed fee, rather than an interest rate. And if they don’t win a settlement, they don’t have to pay the loan back. Because of this, settlement loans are very different than traditional loans, so they require a different set of considerations when buying.
When looking at a specific financial product, like home mortgages, it’s good to familiarize yourself with different terms and common variables, such as the difference between fixed and variable interest rates.
Ignore the Fluff
Most financial institutions are interested in selling their products and services as quickly as possible to as many people as possible, so they engage in persuasive marketing and advertising techniques designed to appeal to the common public. However, it’s a good idea to ignore the marketing fluff. Flashy extra bonuses, special incentives, and exciting language may impair your ability to make an unbiased decision. Make sure to challenge your cognitive biases, look past the initial marketing fluff, and look at the real numbers associated with each offer.
Study the Organization’s Reputation
Before choosing any organization, make sure you take a moment to research its reputation. With due diligence, you can get a better understanding for what type of organization this is and whether it’s worth working with them.
- History. How long has this institution been around? How many customers has it served in the past and how many does it serve currently? It’s possible for new institutions to do a fine job, but older institutions have more at stake and they have more experience. It shouldn’t be your only considering factor, but it should be a considering factor.
- Services. What services does this bank provide, and does it provide those services adequately? Are there enough people working at this organization to sustain it?
- Reviews. What kind of reviews does this organization get? Do people generally seem happy with the service they get and the financial products they’ve bought? If people do complain, what do they complain about? Are there many people who feel like they were treated unfairly by this organization? Or does everyone seem mostly satisfied?
Compare Individual Variables
When comparing financial products, it can be difficult to compare apples to apples, since different companies will offer different sets of variables. Try to study different offers by looking at one variable at a time. Loan A offers a fixed interest rate of 4 percent, so what is the fixed interest rate of Loan B, and how does it compare? What are the terms of these loans?
Consider Tradeoffs
Some financial product offers are going to be strictly better than others, providing more advantages and fewer disadvantages. But most financial products from mainstream institutions are going to be somewhat similar and balanced. If one offers a compelling advantage, like lower fees, it probably has some disadvantage to balance it out. Look for these tradeoffs when comparing different products. If you have a good understanding of your own goals and motivations, you can quickly determine which one is the best fit for you.
Reach Out to Customer Service With Questions
If you’re confused about any of the financial product offers on the table, or if you have questions that aren’t answered elsewhere, reach out to customer service with your questions. Not only will you probably get the information you need to move forward, but you’ll also be able to do a test run to see whether customer service is adequate for your needs.
Choosing a financial product can be a big decision, so you can’t afford to take it lately. Make sure you spend adequate time doing your research, comparing offers directly, and objectively evaluating which offers are the best fits.